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Chrysler, Fiat distribution up in the air

Where now: While it is business as usual in the showrooms, Fiat and Chrysler Group distribution might face changes under a new five-year plan.

Global five-year plan could spell marriage for Chrysler and Fiat in Australia too

19 Oct 2009

FUTURE distribution arrangements for Chrysler Group products (Chrysler, Dodge and Jeep) and Fiat Group products (Alfa Romeo and Fiat) in Australia remain unclear, with their respective importers – Chrysler Australia and Ateco – both saying they are capable of managing all five brands.

Fiat and Chrysler CEO Sergio Marchionne will announce a five-year plan for its newly acquired Chrysler brand on November 4.

Chrysler Australia’s marketing and product general manager Craig Bradshaw said Chrysler Australia would be eager to take on the Turin brands Fiat and Alfa Romeo, should they be rolled into his organisation.

“I guess you would never say never in those sorts of circumstances,” he said. “Anything’s possible. I know that all the markets around the world are looking at the optimum business arrangement that’s going to fit into the new business group as a whole.”

Ateco, the importer of Alfa Romeo, Fiat, Citroen and Great Wall Motors vehicles in Australia, believes no change is imminent.

Ateco public relations manager Edward Rowe said Ateca had a rolling five-year contract for the distribution for Alfa Romeo and Fiat, and these were renewed annually.

 center imageHe said the likelihood of Ateco continuing to distribute Alfa Romeo and Fiat was “very strong”, and that “it is business as normal” for the Italian brands locally despite the tie-up with Chrysler at a global level.

“It is not unusual for a one major car-maker to have more than one distributor for brands in Australia and one of the most obvious examples and it applies to us is Citroen and Peugeot have separate distributors,” he said.

Mr Rowe said he believed that for the Italian brands to move to Chrysler Australia, the new business would require “a multi-million dollar investment”.

On the other hand, he said, Ateco had the facilities to take on Chrysler group brands.

“It would be a no cost option, because we’d be making the investment, not Chrysler. So they could actually move the whole Chrysler operation in to us and that would be a no-cost option for them.”“I’m not saying either is going to happen, but those are the two alternatives.” Mr Rowe said that his company would be keen to take on Chrysler, given the opportunity to do so.

“Ateco is always looking at new business opportunities. One thing you can say about our company is that we don’t stand still, we’re always looking at opportunities to expand and grow the business. So any new opportunity that came along, we would obviously look at it very closely.”

Chrysler’s Mr Bradshaw said Chrysler was still sharing office and parts distribution with Daimler, and that parts distribution in particular had reached capacity and would have to be addressed at some point.

“We’re still using the Daimler networks for IT,” he said. “(Part distribution) is also with Daimler, and as a group we’ve currently hit capacity with the parts warehouse. We’ve been exploring other potential solutions, but that’s a pretty long-term process. It’s only at an exploratory stage at this point.”

If Chrysler Australia took on Alfa Romeo and Fiat, Mr Bradshaw agreed with Mr Rowe in that an investment in new facilities would be necessary.

“We have a strong business structure to handle the volume we have today, the brands, the parts, so there definitely have to be changes made if something like that did come to pass. You can’t just add 50 per cent to your stock or volume and your stock of parts and not have the subsequent business changes flow through to support that.”

Mr Bradshaw said headquarters in Michigan had not yet given any indication of a restructure at a local level, and whether it would include the brands of the Fiat group.

“I can’t really comment on what it might be. I’m sure from a corporate perspective in the respective head offices all scenarios are being considered.

“We have no visibility into that at this stage. All we know at a local level is that they have an existing agreement with Ateco and we’re a sales company of the Chrysler International division, and we’re both operating under those parameters at this point in time.”

Meanwhile, the local Chrysler operation is recovering from not only the impact of the GFC but also the shut-down of production plants during Chrysler’s Chapter 11 bankruptcy proceedings.

“It’s certainly been a challenging time, there’s no two ways about that,” Mr Bradshaw said.

“To a degree, the circumstances of the financial crisis on the market as a whole, I guess everybody’s been through a period of pain for a period of time. Our’s has been a bit longer than others because of the shortage of supply.”

Mr Bradshaw said that while nothing was a given regarding new product, news could only be good with the Marchionne announcement pending.

“It’s really too early to tell in any great detail,” he said. “At a local level, we’re certainly excited by the prospects with Fiat.

“They’ve got a lot of great platforms and they’ve got a lot of great technology, I guess it’s going to give us a leapfrog start.”

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